(Bloomberg) -- One of Brazil’s biggest education companies expects consolidation in the sector within the next several years.
“Within five years it’s unlikely that there won’t be a big movement,” Eduardo Parente, chief executive officer of Yduqs Participações, said Wednesday in an interview during Bloomberg New Economy at B20 in São Paulo, talking about the sector in general.
M&A speculation has gained momentum in recent weeks after Valor Economico reported that Yduqs and its biggest competitor, Cogna Educação, are in talks about potentially combining businesses. Antitrust regulators rejected a merger attempt seven years ago over concerns that it would have hurt smaller rivals.
Parente said any potential deal in the sector would hinge on price and multiples. He didn’t comment about a possible deal with Cogna.
Yduqs offers graduate, masters and technical courses and and is among Brazil’s three largest educational companies in terms of number of students, with 1.2 million. Parente said that the in-person instruction business is doing well, but the virtual learning segment has stopped growing.
The company’s shares have plunged almost 50% this year. Its market cap is now about 3.4 billion reais ($600 million).
Parente said he’s confident in the company’s five-year plan for profit and reduced leverage. The company is increasing revenue tied to in-person teaching - Yduqs recently received government approval to expand medical school places, with higher tuition fees. He adds company is also focused on not relying on government subsidies.
As a result, Yduqs is poised to generate more cash in coming quarters and may be in position to raise its five-year guidance after the first quarter of next year, Parente said.
“In 2025, there will be greater confidence in what we will say,” he said.
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